IMF reaches staff-level agreement with Sri Lanka on fifth review

Colombo, Oct. 9 (Daily Mirror) - The International Monetary Fund (IMF) and the Sri Lankan authorities have reached a staff-level agreement on economic policies to conclude the Fifth Review of Sri Lanka’s reform program under the Extended Fund Facility (EFF). 

Once approved by the IMF Executive Board, the country will gain access to approximately US$347 million in financing.

The IMF mission, led by Mr. Evan Papageorgiou, visited Sri Lanka from September 24 to October 9, 2025, to review recent macroeconomic developments and assess progress under the reform program. The EFF arrangement, amounting to SDR 2.3 billion (around US$3 billion), was originally approved by the IMF Executive Board in March 2023.

Mr. Papageorgiou noted that Sri Lanka’s economic reforms continue to deliver commendable outcomes, with inflation stabilizing, foreign reserves building up, and growth exceeding expectations. 

The economy expanded by 4.8 percent year-on-year in the first half of 2025, with inflation rising modestly by 1.5 percent in September, signaling progress toward stability.

Gross official reserves stood at US$6.1 billion by the end of September, while fiscal performance was strengthened by improved revenue collection—particularly from motor vehicle import taxes. Debt restructuring, a key pillar of the reform program, is reportedly nearing completion.

“Program performance is strong, underpinned by good fiscal revenue outcomes and improvements in external resilience,” Mr. Papageorgiou said in a statement. 

“The reform momentum should be sustained to safeguard macroeconomic stability and enhance Sri Lanka’s resilience to shocks.”

The staff-level agreement remains subject to Executive Board approval, contingent upon Parliamentary approval of the 2026 Appropriation Bill and the completion of the financing assurances review to confirm contributions from multilateral partners and adequate progress in debt restructuring.

Upon completion of the review, Sri Lanka’s total disbursement under the program will reach about US$2.04 billion.